Retail investors invested over $100 million in MicroStrategy stock just before the 35% drop, but analysts forecast a recovery in MSTR soon.
MicroStrategy (NASDAQ: MSTR) stock has faced intense selling pressure, plunging another 12% on Tuesday to close at $353. Over the past five trading days, the stock has declined by 35% from its November 21 peak.
This sharp drop aligns with Bitcoin’s recent price correction to $92,000, amplifying the selloff in MSTR and sparking concerns of a “pump and dump” scenario targeting retail investors.
MicroStrategy Stock Declines Amid Bitcoin Price Correction
As Bitcoin prices fell by approximately 9-10% over four days, MicroStrategy’s stock plummeted by 35%, losing $30 billion in market capitalization during this period—four times the percentage drop seen in Bitcoin.
MSTR, often viewed as a leveraged Bitcoin proxy, has exhibited significant volatility, leaving retail investors particularly exposed.
Last Wednesday, retail investors purchased around $42 million worth of MSTR shares, marking the highest single-day purchase in the company’s history, according to The Kobeissi Letter.
This spike was eight times the daily average seen in October. Over the past week, retail investors poured a total of $100 million into MSTR, only to see the stock collapse shortly afterward.
Following Donald Trump’s election victory in November, the correlation between Bitcoin and MSTR strengthened further.
However, with the recent 35% correction in the stock, both assets remain up by 37% for the month.
The recent dip has also impacted MicroStrategy’s value multiplier, which dropped from 3.34x to 2.36x in just five days.
At its current market capitalization of $73.1 billion, MSTR is trading at 2.1 times the value of its Bitcoin holdings.
Meanwhile, founder Michael Saylor has continued to expand MicroStrategy’s Bitcoin reserves. Over the past week, the company increased its BTC holdings by 16%, purchasing 55,500 Bitcoin for $5.4 billion. This brings its total holdings to 386,700 BTC.
What’s Next for MSTR?
Investors are questioning the future trajectory of MSTR after its 35% fall. On Tuesday, the stock tested its 20-day Exponential Moving Average (EMA) and held the level, suggesting potential support at that point.
Analyst Traderstewie predicts a rebound, noting that an upward gap at the market open could signal a reversal phase and lead to a significant recovery.
However, some analysts suggest that Marathon Digital (MARA) may offer a better investment opportunity than MSTR at this time.
The sharp decline in MSTR and Bitcoin has fueled criticism from skeptics like Peter Schiff. He commented:
“It’s now been four weeks since the company announced its three-year plan to spend $42 billion buying Bitcoin. MSTR has already spent $10 billion. At this rate, the three-year plan will be completed in about 16 weeks. Once the buying is done, expect both Bitcoin and MSTR to crash.”
